Wallet holdings for Bitcoin have been dropping at a rapid rate

Wallet Holdings for Bitcoin Have Been Dropping at A Rapid Rate

According to recent data, the number of Bitcoins that crypto users have been holding in their wallets is at a low. Wallets on crypto exchanges with centralisation have seen a drop of 4% in holdings this month alone. It has dropped down to 2 million (worth roughly $54 billion), a figure we have not seen since the start of 2018.

The reasons for this are likely for many reasons, both good and bad. The reason is, however, mostly due to a more advanced crypto market. For example, services such as ClearLoop wallet allow users to safeguard their crypto coins without depositing them in a public exchange.

Such services allow users to deposit their currencies with only a minimum number of coins. Such a development is only the next stage in the evolution of the crypto market, and analysts are not surprised. From now on, crypto exchanges will have to function with a lower amount of liquidity, and more so going into the future. These exchanges will have to find new ways to profit in the crypto market, as it seems this movement is permanent. An anonymous Bitcoin wallet may just not be cutting it anymore.

What Caused a New Era of Crypto Wallets?

The reason for the rise of these new services is likely due to one reason. For one, users may lack trust in centralised crypto exchanges. Most importantly, FTX, a large crypto exchange, suddenly went bankrupt almost a year ago. FTX is the third largest crypto exchange in the world. This would have been a huge blow to many crypto traders. This crash has, therefore, set off a trend of crypto traders derisking by moving off of such exchanges.

Now, there has been a rise in crypto custodians. Crypto strategies of all varieties overwhelmingly recommend using them. Most people who invest in the industry now use a custodian of some sort. According to a crypto hedge fund from the previous month, only 9% of those responding reported using only exchanges for their crypto trading using only coin wallets.

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